The cruel thing about blockchain economics is that it's not for Gain, nor for any of his friends to decide about sizes of the blocks.
It's the mining, that he doesn't care of.
So I just wonder what is in this guy's head when he assumes that miners actually care about him and his opinion on a size of their blocks? Who is he actually speaking to with poems like this and what is a point of this?
People who understand the problem know that the key to make bitcoin really scalable and keeping transactions cheap is adding a layer of off-chain transactions on top of the existing protocol.
Even Gavin knows that - but apparently he prefers to have been spending the past two years of his life on developing an 'intelligent' fee discovery system and writing papers on why the blocks must be bigger.
And don't worry - he won't mind me saying it, I'm on his ignore list.
Topic: Blocksize Economics - page 2. (Read 3211 times)
Dear Gavin
Thanks for providing the update on the Scalability Roadmap piece and for focusing more on some of the economic issues. See https://bitcoinfoundation.org/2014/10/blocksize-economics/ I think it’s very good that you have addressed and discussed some of these crucial economic and incentive type issues.
First let me address your comment that “economic theory says that in a competitive market, supply, demand, and price will find an equilibrium where the price is equal to the marginal cost to suppliers plus some net income (because suppliers can always choose to do something more profitable with their time or money). In this case, price is transaction fees, supply is the willingness or ability of miners to confirm transactions, and demand is the number of transactions people want to have confirmed.” It is important to realise that Bitcoin is in some respects unique and unlike any system that came before it, it is not always possible to apply the normal rules of “economic theory” to this system. This is not a normal market with normal supply and demand. There are several key differences:
1. Normal markets do not have a difficulty adjustment every two weeks
2. In normal markets there is no reason why having a large number of suppliers competing is important
3. In normal markets suppliers don’t compete in a bingo like random competition to be awarded the contract
Contrasting the market for space in blocks with other markets is a useful exercise, however one must realise the dynamics are potentially very different and requires careful analysis.
Neither I, nor the other people saying that having no arbitrary limit in the block size would mess up mining economics are saying the limit does not need to be increased. I think there is a strong consensus that an increase is necessary. I merely maintain that some limit is necessary for economic reasons. When the block reward falls there is no guarantee that any system will produce enough revenue to miners to secure the network. An arbitrary level of scarcity in the block size limit (at a much higher level than 1MB), is the best method I can think of for providing this security, even though it is far from perfect.
Many thanks
Thanks for providing the update on the Scalability Roadmap piece and for focusing more on some of the economic issues. See https://bitcoinfoundation.org/2014/10/blocksize-economics/ I think it’s very good that you have addressed and discussed some of these crucial economic and incentive type issues.
First let me address your comment that “economic theory says that in a competitive market, supply, demand, and price will find an equilibrium where the price is equal to the marginal cost to suppliers plus some net income (because suppliers can always choose to do something more profitable with their time or money). In this case, price is transaction fees, supply is the willingness or ability of miners to confirm transactions, and demand is the number of transactions people want to have confirmed.” It is important to realise that Bitcoin is in some respects unique and unlike any system that came before it, it is not always possible to apply the normal rules of “economic theory” to this system. This is not a normal market with normal supply and demand. There are several key differences:
1. Normal markets do not have a difficulty adjustment every two weeks
2. In normal markets there is no reason why having a large number of suppliers competing is important
3. In normal markets suppliers don’t compete in a bingo like random competition to be awarded the contract
Contrasting the market for space in blocks with other markets is a useful exercise, however one must realise the dynamics are potentially very different and requires careful analysis.
Neither I, nor the other people saying that having no arbitrary limit in the block size would mess up mining economics are saying the limit does not need to be increased. I think there is a strong consensus that an increase is necessary. I merely maintain that some limit is necessary for economic reasons. When the block reward falls there is no guarantee that any system will produce enough revenue to miners to secure the network. An arbitrary level of scarcity in the block size limit (at a much higher level than 1MB), is the best method I can think of for providing this security, even though it is far from perfect.
Many thanks
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